The January employment report is likely to be a confounding one for Federal Reserve officials. On the one hand, growth in jobs looks soft. On the other hand, the unemployment rate is fast approaching a 6.5% threshold for considering interest rate increases.

The Federal Reserve building.

Reuters

Weak job gains beg the question of whether the Fed will keep reducing its monthly bond purchases as planned; a falling jobless rate begs the question of whether the Fed will raise interest rates sooner than planned.

Fed Chairwoman Janet Yellen will have to explain these contradictory signals next week, when she testifies before Congress on the outlook for the economy and monetary policy.

She still looks likely to signal a steady-as-she-goes approach — continued reductions in bond buying and no rate increases for a long time. There is little pressure on Ms. Yellen to change course while inflation remains well below the central bank’s 2% target and the economy still growing and producing jobs. But it is becoming a more difficult message to explain.

Here are a few quick thoughts on the jobs data and the challenges they pose for the Fed:

DON’T PULL OUT YOUR ERASER YET: The big question for the Fed today is whether recent data have been soft enough to warrant forecast revisions for the economy. If the Fed lowers its forecast of a growth pickup in 2014 — tied together with firming inflation and continued improvement in the job market — it could decide to keep its bond-buying program going longer than planned.

Here are five reasons to think Fed officials won’t revise their forecasts significantly:

1) The last couple of months have been marked by stormy weather that might be depressing job gains.

2) The longer-run trend of job growth actually hasn’t changed that much. In the past 12 months, firms added 2.2 million jobs to their payrolls. Twelve month job growth has hovered between 2.1 million and 2.5 million since Dec. 2011.

3) It is early in the year. Like anybody, Fed officials tend to stick to their forecasts until they see an accumulation of evidence that they’re wrong.

4) January is a quirky month for seasonal adjustment by government statisticians, because it comes right after the holiday season, when there is a lot of turnover at retailers and other seasonal businesses. Retail trade faced a big drop in jobs in January. Construction, on the other hand went up. Annual revisions to household and payroll surveys add to the doubt about the numbers.

5) There were bright spots in this report, albeit clouded by potential season and statistical quirks in the report. Labor force participation rose; the employment-to-population ratio rose; alternative measures of employment in the Labor Department’s household survey rose robustly; broad measures of underemployment declined.

Fed officials are likely want to see more data, over a longer stretch of time, before they change their forecasts.

LESS CONVICTION: Having said that, the latest batch of data will certainly give Fed officials less conviction about the economic upturn they’ve been forecasting. When Fed officials submitted their economic projections in December they also wrote down whether the uncertainty they felt about the forecast was greater or less than usual. Only three said their uncertainty about the economic growth outlook was greater than usual. By contrast, in December 2012, when officials wrote down their forecasts, 18 said their uncertainty was greater than usual.

Officials came into the year believing that headwinds to economic growth – such as tight U.S. fiscal policy and debt-burdened households unwilling to spend – were starting to dissipate. Now they are staring at a world–and in particular big emerging markets such as China, India and Brazil– that look less robust than they did before. Perhaps that’s a new headwind. The combination of soft data, jittery markets and the economy’s perpetual capacity to disappoint in this recovery likely has officials shifting in their seats.

“MR. CARNEY, PLEASE HOLD FOR MS. YELLEN”: The Bank of England and the Federal Reserve now both have a very similar dilemma. The Bank of England, under Governor Mark Carney who took over last summer, has said it won’t raise short-term interest rates as long as the U.K. unemployment rate remains above 7.0%. It now hovers at 7.1%. The Fed has said it won’t raise interest rates as long as the jobless rate remains above 6.5%. It’s now at 6.6%.

Both central banks are tiptoeing away from these unemployment rate thresholds, because they’re puzzled about what’s driving unemployment down and they don’t want to rush to raise rates. The Fed has said it will keep rates near zero “well past” the time that the jobless rate reaches 6.5%. Mr. Carney has said the U.K. recovery has a way to go before it will time to raise rates. But as the unemployment rates approach their thresholds both are under increased pressure to explain how their framework for rates is changing.

Next week is important for both officials. Ms. Yellen testifies before congressional committees Tuesday and Thursday. Mr. Carney is scheduled to hold a press conference Wednesday after the BOE releases new forecasts for growth and inflation. Both need to explain how their interest rate guidance fits into an economic picture that threatens to disappoint, on one hand, even as the economy is fast moving toward targets they set out.

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